TaxTMI 
TaxTMI 
2023 (10) TMI 1497
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....consideration for deciding the above appeals en masse. 3. Grounds of appeal raised by the Revenue in "lead" case in ITA No.458/SRT/2023 for AY.2011-12, are as follows: "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition made by the AO of Rs.10,53,02,132/- to 6% of the turnover without appreciating the facts that the assessee had failed to prove the genuineness of the transaction made with M/s Rose Gems Pvt. Ltd. which was identified as a bogus entry provider, completely run by Shri Bhanweralal Jain. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in partly deleting the addition without considering that Shri Bhanwerlal Jain has admitted in his statement u/s 132(4) of the Act given in the course of search and seizure action that with M/s Rose Gems Private Limited was run by him and engaged in the business of providing accommodation entries. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the addition to 6% of the turnover by relying the CBDT's instruction No.03/2028 which is not applicable in this case as the as....
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.... beneficiaries) etc. During the course of search various premises which were shown by the assessee group to be the place of operations and registered addresses as per the ITR, MCA website and bank documents were covered. However, it was found that the entities were non-existing at these addresses and no genuine business was being carried out at any of these premises. The search enquiries had revealed that various persons shown to be the director/proprietors of different concerns were non-exist it on the given addresses. During the course of the statements recorded u/s 132(4)/131 of the Act these directors / proprietors admitted that they were merely dummy directors and used to sign different papers for nominal consideration given by Shri Bhanwarlal Jain. They were unaware of the place of operations, books of accounts and the business being carried out by the concerns where they were directors / proprietors. After perusal of such documents/statement, it was found that Bhanwarlal Jain through various dummy directors/proprietors, controls, operates, and manage a large number of concerns. All such concerns are not carrying out any genuine business. They do not have any physical stock o....
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....to file its return of income for the assessment year under consideration within 30 days. In response to the same the assessee field its return of income on 17.04.2018. The reason recorded for re-opening was provided to the assessee. Thereafter notice u/s 143(2) was issued to the assessee on 01.08.2018 and the same was served upon the assessee on the same day. Thereafter the assessee filed its objection against the re-opening and the same was disposed off by passing speaking order date 21.08.2018. Thereafter notice u/s 142(1) was issued to the assessee on 15.09.2018 calling certain details. In response to the notice issued to the assessee, the assessee submitted its submission before Assessing Officer. After considering the assessee's submission on merit, the Assessing Officer disallowed bogus purchases of Rs.10,53,02,132/-. 7. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has restricted the addition of bogus purchase from 100% to 6% observing as follows: "4.0 Decision: 4.1. There is difference in trade in diamonds and that in Aloo/Pyaz. In vegetable one can say that I bought so many Kgs and sold....
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....om M/s Rose Gems Pvt. Ltd. to the tune of Rs.10,53,02,132/- is not clear. Therefore Ld. Counsel contended that the matter may be set aside to the file of NFAC/Ld.CIT(A) for adjudication on this issue whether estimated addition sustained by NFAC/Ld.CIT(A) @ 6% is on total "turnover" of the assessee or on bogus purchases made by the assessee. Alternatively, the Ld. Counsel submitted that assessee has submitted bills, vouchers, stock details, balance sheet and profit and loss account, before the Assessing Officer, hence, assessee has proved the genuineness of bogus purchases, therefore, no addition should be made in the hands of assessee. 11. We have heard the rival contentions, perused the material on record. We note that M/s Rose Gems Pvt. Ltd. is managed and controlled by Shri Bhanwarlal Jain group case and this Co-ordinate Bench of Tribunal in the case of Shri Bhanwarlal Jain had sustained the addition on bogus purchases @ 6%. Hence, these appeals are squarely covered by the judgment of this Tribunal in the case of Pankaj K. Choudhary, in ITA No.1152/AHD/2017 for AY.2007-08, wherein the Tribunal held as follows: "12. We have heard the submission of ld.CIT-DR for the Re....
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....urt). • AGR Investment Vs Additional Commissioner 197 Taxman 177 (Delhi) and • Chuharmal Vs CIT [1998] 38 Taxman 190 (SC). 14. On the other hand, the ld.AR of the assessee submits that he has challenged the validity of reopening as well as restricting the addition to the extent of 12.50% of the alleged bogus purchases. The ld.AR of the assessee submits during the assessment, the AO has not made any independent investigation. The AO reopened the case of the assessee on the basis of third party information without making any preliminary investigation. The AO received vague information about providing accommodation entry by Bhanwarlal Jain Group. No specific information about the accommodation entry obtained by assessee was received by AO. There is no live link between the reasons recorded qua the assessee. Therefore, the re-opening is invalid and all subsequent action is liable to be set aside. 15. On account of additions of bogus purchases, the ld.AR submits that in the original assessment, the assessee filed its complete details of purchases to prove the genuineness of expenses. The AO accepted the same in the assessment order passed unde....
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....its that that rigour of the rules of evidence contained in the Evidence Act is not applicable before the tax authorities. It was submitted that the ratio of various case laws relied by the ld. AR for the assessee is not applicable on the facts of the present cases. The ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts of the present case. 17. We have considered the submissions of the parties and have gone through the order of the lower authorities. We have also deliberated on each and every case laws relied by both the parties. We have also examined the financial statement of all the assessee(s) consisting of computation of income and audit report. We have also gone through the documentary evidences furnished in all cases. Ground No.1 in assessee's appeal relates to the validity of reopening. The ld AR for the assessee vehemently argued that the AO reopened the case of the assessee on the basis of third party information, and without making any preliminary investigation, which was vague about the alleged accommodation entry by Bhanwarlal Jain Group. And that there was no specific information about ....
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....s appeal is dismissed. 19. Ground No. 2 in assessee's appeal and the grounds of appeal raised by the revenue are interconnected, which relates to restricting the disallowance of bogus purchases to the extent of 12.5%. The AO made of 100% of purchases shown from the hawala dealers/ entry provider namely Bhanwarlal Jain. We find that the AO while making additions of 100%, of disputed purchases solely relied on the report of the investigation wing Mumbai. No independent investigation was carried by the AO. The AO has not disputed the sale of the assessee. The AO made no comment on the evidences furnished by the assessee. We further find that ld CIT(A), while considering the submissions of the assessee accepted the lapses on the part of the AO and noted that no sale is possible in absence of purchases. The Books of the assessee was not rejected by the AO. The ld CIT(A) on further examination of the facts and various legal submissions find that Ahmedabad Tribunal in Bholanath Poly Fab Private Limited (supra) held that in the such cases the addition of bogus purchases was sustained to the extent of 12%, on the observation that the assessee may have made purchases from elsewhere ....
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....he Hon'ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs. 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is partly allowed and the grounds of appeal raised by revenue are dismissed. 22. In the result the appeal of revenue is dismissed and the appeal of the assessee is partly allowed." 12. However, we note that Ld. Counsel for the assessee as well as Ld.CIT-DR for the Revenue have stated that it is not clear whether estimated addition is on bogus purchase or the total "tu....